Hong Kong stocks fall amid concerns over weak local dollar, US-China trade war

Slump in heavyweight stocks such as Tencent weighs on benchmark Hang Seng Index

PUBLISHED : Monday, 16 April, 2018, 9:32am
UPDATED : Monday, 16 April, 2018, 8:48pm

Hong Kong stocks fell to a one-week low on Monday, pulled down by heavyweights such as Tencent Holdings, Chinese financials and property developers, amid concerns about a weak local currency and the US-China trade war.

The Hang Seng Index dropped 1.6 per cent, or 492.79 points, to 30,315.59 at the close and the Hang Seng China Enterprises index slid by 2.1 per cent, or 253.10 points, to 12,008.13.

Chinese internet giant Tencent eased 1.2 per cent to HK$403, knocking 35 points off the benchmark index.

Ping An Insurance (Group) slid 2 per cent to HK$82.30. Its subsidiary, Ping An Good Doctor, is reported to have passed a listings hearing in Hong Kong, with road shows scheduled from April 23 to April 26, with a flotation expected on May 4.

China Construction Bank lost 2.3 per cent to HK$7.98 and the Industrial and Commercial Bank of China tumbled by 2.4 per cent to HK$6.66. Hong Kong Exchanges and Clearing, the city’s bourse operator, was 2 per cent lower at HK$258.80.

Property developers fared poorly too. Country Garden slumped by 3.9 per cent to HK$15.90, China Evergrande Group slumped 5.7 per cent to HK$25.80, and Sun Hung Kai Properties lost 2.9 per cent to HK$125.50.

“Market sentiment is being hit by the HKMA’s need to intervene in the market, and by the unstable geopolitical and trade environment,” said Stanley Chan, director of research at Hong Kong-based Emperor Securities.

The Hong Kong Monetary Authority stepped into the foreign exchange market for a second day on Friday to prop up the Hong Kong dollar, in line with the city’s currency board system, to peg the local dollar to the US dollar. It bought HK$6.4 billion (US$815.3 million) on Friday and HK$3.26 billion on Thursday. The Hong Kong dollar hovered around the 7.8500 level in late afternoon trading.

Intervention by the city’s de facto central bank has sparked worries about the prospects of tighter liquidity in the banking system and a path to higher interest rates for the city, which could eventually prick its massive property bubble.

Meanwhile, media reports suggest the United States may publish a detailed list this week of the US$100 billion worth of tariffs it plans to impose on China. The White House is apparently increasing pressure on Beijing by preventing it from investing in science and technology in the US, to force it to make trade concessions.

On the mainland, the Shanghai Composite Index fell by 1.5 per cent, or 48.40 points, to 3,110.65, the lowest level since June, after a slew of economic data released on Friday, from imports and exports to money supply and aggregate financing, missed estimates.

“These data add to the pessimism about China’s economic outlook and the downside pressure on economic growth seems to be growing now,” said Ken Chen, a strategist at KGI Securities in Shanghai.

Companies based in China’s southernmost province of Hainan surged after Beijing said the island will be allowed to develop horse racing and sports lotteries as part of its plans to turn it into the nation’s biggest pilot free-trade port.

Haima Automobile, a carmaker based in the capital city of Haikou, jumped by the 10 per cent daily limit to 4.59 yuan. Hainan Dadonghai Tourism Centre surged 10 per cent to 12.94 yuan and China Hainan Rubber Industry Group climbed 10 per cent to 6.80 yuan.